Substantial Reforms Impacting Directors are on the Way
Last year in a client newsletter we outlined
the consultation process leading to potential Phoenix reform legislation, and we
now note that legislation is before Parliament, Treasury Laws Amendment (Combating
Illegal Phoenixing) Bill 2019, that brings those reforms into the light.
It now seems quite likely that legislation will pass that will have the following significant effects on Directors:
- a new Phoenixing offence will be introduced, termed a creditor defeating disposition, that will seek to penalise those who engage in or facilitate Phoenix styled dispositions that disadvantage creditors;
- ensure that Directors are not able to improperly backdate resignations or cease to be involved in a company to mask their involvement in Phoenix styled transactions;
- make Directors personally liable for their company’s GST, LCT and WET obligations, with amendments being made to the existing director penalty notice regimes; and
- enable the Commissioner to retain tax refunds when taxpayers have failed to lodge returns or provide other information.
The extension of personal liability for GST appears the most significant new hurdle for directors to traverse, and we would encourage advisers to directors with tax arrears, to use the lead-up period to the likely implementation of this legislation to get up to date with the calculation and reporting of amounts owing, which will then facilitate the ability to make effective repayment arrangements with the ATO.
The introduction of this legislation has been criticised by some industry groups; however, it remains only a problem for those directors of companies who are not correctly managing their tax payment obligations.
Our office has been preparing and delivering detailed staff training on the implications of these proposed amendments, and if your firm would like further information, please contact our office.